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PROPERTY POWERHOUSE

Nepi eyes bigger deals after Rockcastle merger

The property powerhouse will open new markets in Eastern Europe to the group, says Nepi CEO Alex Morar

17 February 2017 - 07:12
Alistair Anderson

Alex Morar. Picture: SUPPLIED

New Europe Property Investments’s (Nepi’s) merger with Rockcastle Global Real Estate in June, to become the largest property company in Eastern Europe, will open new markets to the group.

The two companies, which are part of the Resilient group, are on track to become an entity worth more than R80bn. This will make it the largest real estate company on the JSE.

Nepi CEO Alex Morar said at a results presentation in Sandton on Thursday that the new entity would be able to pursue deals worth from €70m to €200m and possibly beyond.

Nepi and Rockcastle, which were dominant in Romania and Poland respectively, had pinpointed opportunities in Slovakia, Croatia and Serbia. They would also consider Bulgaria and Hungary but not in the immediate future.

Serbia was attractive partly because its consumption was expected to double in the next decade. which suggested a need for more shopping centres. Slovakia’s consumption was forecast to grow nearly 60%.

Nepi’s cost of funding would fall thanks to the merger. The company’s credit ratings would also improve as higher rated Polish assets were added to a portfolio of predominantly Romanian assets.

"Nepi and Rockcastle have been the two most aggressive property investors in central and eastern Europe for the past few years and I believe the rest of the market there has begun to take notice," said Morar.

Commentators have said that the new group, which will be called Nepi Rockcastle, could encourage some institutional investors to opt to buy into an offshore powerhouse as opposed to into local players.

"Some index trackers would have to buy shares in the new Nepi Rockcastle. It would potentially rank as the seventh-largest real estate company in the Euronext index … and the third-largest retail-focused fund, behind Unibail and Klepierre," said Cratos Capital money manager Ron Klipin.